Artificial Intelligence

How UK challenger bank Tandem is personalizing its mobile app

  • Tandem Bank, one of the U.K.'s biggest challenger banks, is working with tech company Personetics to deliver personalized finance recommendations to customers based on data
  • The move is the latest among U.K. challenger banks to 'own' the PFM space, adding pressure on incumbents to innovate
How UK challenger bank Tandem is personalizing its mobile app

Tandem, one of the U.K.’s largest challenger banks, is upgrading its mobile experience to deliver personalized, data-driven insights.

The bank’s mobile app will now offer customers personalized insights and recommendations based on their spending habits — an offering that could grow the company’s business of referring clients to other providers, said CEO Ricky Knox. But the heart of it is about keeping customers engaged —  a “lifetime benefit driver.” By using customer data, the bank can offer customers spending reports and tips on how to save, and possibly change service providers to make that happen.

“Banks have access to transactions, and that data is a gold mine of information of how you interact with and spend your money,” said Tandem’s chief technology officer, Paul Clark. “Going through transaction data to find snippets of information that are important can help you optimize your finances and not worry about it.”

Tandem is the latest among U.K. challenger banks to amp up PFM experiences within its mobile app. The tech enhancements are the result of a deal with Personetics, a New York-based technology company that delivers cognitive applications for banks, on Monday. U.K. challenger banks including Atom, Monzo, Starling Bank have all invested in personal finance insights that legacy banks have been slow to adopt, said Forrester analyst Aurélie L’Hostis. By adding a more sophisticated way to deliver these insights, it’s going after customers who feel legacy institutions aren’t doing enough.

“Tandem is following up on what [other] challenger banks are doing, but rather than offering quite standard money management tools, they’re going to able to offer something more personalized and more conversational,” she added.

The app’s observations about customers finances — where they’re spending they’re money — appears as they open the app. Based on what it knows about the customer’s spending behavior, it can also nudge them with questions on how to optimize savings. For example, it might ask the customer if the customer wants it to put spare cash into a savings account.

With the new feature the app can also be proactive about detecting larger goals based on individual purchases. If it notices a customer purchased a flight ticket purchase, for example, it can ask if that customer would like to create a holiday savings account, Clark explained. The bank can also feed other information it knows about the customer to craft personalized recommendations. So, if a customer’s utility bill is rising and Tandem can recommend a provider with lower rates, it can deliver those recommendations through the app.

tandem_insights

The app provides a conversational experience for the customer, but rather than using an external chatbot interface via text, it’s happening within the app. The bank directs the conversation, presenting information to which the customer could react. It represents a shift in thinking away from conversations led by the customer, to contextual interactions directed by the financial institution.

“There’s a conversational interface, but it’s proactive,” said Personetics chief marketing officer Eran Livneh. “The market is moving away from initial thought processes about chatbots that were convenient interfaces for people into something that is part of a broader way to communicate with customers.” So, instead of just providing insights through a conversation with a bot, customers are prompted with the  spending reports and encouraged to think about taking actions that may improve their financial health.

The technology upgrade comes alongside important moves to grow Tandem’s reach. The five-year-old digital bank, which currently has 25,000 customers and $516 million in assets, has had some recent challenges when department store House of Fraser, owned by China’s Sanpower, pulled a $49 million investment due to restrictions on capital leaving China. The setback cost Tandem its banking license a year ago. But Tandem acquired Harrods Bank in August, allowing it to regain its banking license last month, along with a $279 million loan book and $418 million in deposits. It currently makes most of its revenue off mortgage loans, according to the company.

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